Filing for bankruptcy is never an easy decision, especially when it comes to owning a franchise store that you used personal assets to secure. You wanted so much for this endeavor to succeed, but it cannot. There is no way to make up the difference between what you owe and what your customers are purchasing. Here is what you can expect when you consult a lawyer from a consumer bankruptcy practice.
Chapters 7, 11, and 13: Bankruptcy
In your case, your franchise store will file a Chapter 11 bankruptcy. This liquidates most of your inventory, allowing you to use the profits to pay a portion of your debt. The remaining debt is usually forgiven, so long as it is a relatively small amount. All of your store fixtures, signs, mannequins, etc., are also liquidated to pay down remaining debt. Your franchise store may qualify for a Chapter 7 bankruptcy or a Chapter 13 if you have personal assets involved.
List of Everything in the Store and Personal Assets Tied to It
When you decide to file for bankruptcy, you have to make a list of everything in your store. From the racks to the pins, from the merchandise to the light bulbs, everything has to be listed. Then down one side you list what you paid for each of these things individually. On the opposite side of the paper, you list what you sold it for.
Additionally, you will need to put down all of your personal assets that you used to secure your business. Your house, car, vacation property, etc., all should be listed. This helps the judge see what you were able to liquidate and what you got for it when he or she looks at your remaining debt, as well as what you have to lose if bankruptcy does not release your personal assets. Your bankruptcy lawyer can help you decide what to do and find out if you can still save your home or other assets from being sold to pay business debt.
Tons of Sales for a Month or More
You will need to advertise a "going out of business" sale. Then, you will have to mark down everything you have in stock so that it will sell quickly. The idea with bankruptcy and a franchise store is to sell everything within a month or less so that you can pay down the debt before you appear in court for the bankruptcy hearing. Showing the judge that you liquidated everything and tried to pay as much of your business debt as you could will garner some favor with the judge.
Contact someone like Stuart R Whitehair Attorney if you're concerned about how your personal finances and assets factor into your business and bankruptcy.